DESCRIPTION(Applicant's abstract reproduced verbatim): Subsequent to the end of gastrulation a series of developmental steps transform the anterior most neural plate from an apparently unpatterned sheet of neural epithelium into the highly order structure that gives rise to the mature telencephalon. These patterning events result in the telencephalon being divided into three major domains from dorsal to ventral, the cortex, the LGE (which gives rise to the striatum) and the MGE (which gives rise to the globus pallidus). Studies by a number of groups, including our own, have begun to shed light on the molecular and cellular mechanisms underlying how these regions are established. Analysis of Shh mutant embryos has demonstrated that this gene is essential for the formation of the basal ganglia. Less clear is the mechanism by which this is mediated. Insight into this process has come from in vitro studies in my laboratory that suggest that Shh requires the addition of acyl groups for activity within the telencephalon but not in the spinal cord. In this application we propose to test the region specific requirement for the acylation of Shh in vivo, through gain of function and loss of function analysis. We have also shown that the telencephalon undergoes a progressive change in its competence to respond to Shh and that these changes in competence play a key role in dorsoventral patterning within the telencephalon. Specifically, early exposure of naive telencephalon to Shh results in Nkx2.1 induction, later exposure to Shh induces Gsh-2 expression. We will use both genetics and ectopic expression to study the role of these genes. In the proposed studies, we will also determine whether these changes in Shh responsiveness are mediated by an extrinsic or cell-autonomous mechanism, as well as examine the possible roles of factors that may cooperate with Shh, such as BMP, Wnt and FGF proteins.